Good housing that pays /

Now we come to the question—does it pay? Obviously there are two sides to the answer, one the material, the other the spiritual. Let us consider, in the first place, the actual cash return.

We have already cited the satisfactory financial results in the case of a few typical properties. It is a postulate that those who are looking for the largest possible dividend on an investment without regard to any other consideration will scarcely be satisfied with the 4 per cent. which the Association is paying. The stockholders of the Association and the directors as a rule are glad to realize that their investment is providing good homes for the poor at low cost, and they are content to forego the somewhat higher profits that might accrue if nobody cared how the tenants lived.

A trust company, in behalf of an estate, had charge of a group of small houses erected as model homes for the poor. Under the trust company’s management, the average gross income from these houses for three years was $72 per month and the net income was $14.34 per month. The property came under the control of the Association. During the first two years under the new order the gross income was $148, and the net income was $70. The trust company, far from the scene, sent a clerk or depended on the services of a local real estate agent. Neither personally interested himself in the welfare of a tenant. The Association sent the friendly rent-collector who immediately reported the need of repairs, watched the workmen, stood at all times in the closest personal relation to the living problem of the householder, and obtained good tenants as soon as vacancies occurred, thus reducing to a minimum the losses due to unlets.

We see that under the system of absentee landlordism the net returns were about a fifth of the gross receipts, while under the system of constant personal vigilance the net returns were about one-half of the gross income.

The inherent possibilities of the Association’s system extended to Chambers of Commerce or Boards of Trade or Women’s Clubs are almost infinite. One of the best rent-collectors the Association has had says that the essential things are “to know the value of money and of punctuality, a little housekeeping, a little home-making—the rest will come in the doing.” Collectors of this type, in the employ of the Association, could give invaluable aid as agents to trust companies and other organizations that occupy a fiduciary relation toward the owners of property in the congested areas.

The organization and operation of the Model Homes Company, formed to build the group of houses in the Richmond district, have been described. To show how closely, from long experience, the Association figures on the cost of repairs and other expenses, a leaf may be taken from the account books of the Model Homes Company. These estimates and actual costs are, except as noted, for a year ending November 29, 1916.

Here is another example of the profitable handling of houses that had seen better days.

In 1903 the Association bought as agent two four-story brick houses about half occupied by a low class of negroes. Everything within and without was as bad as it could be. The houses had been converted from private residences into tenements without the knowledge of the city authorities. Behind the larger houses were six of the little “one, two, three” houses, all served by one hydrant. The owners had relied entirely on an agent who cared for nothing but the rents. When at last they saw what they had on their hands they were horrified, and parted with it for a lower price than they had named at first—$4,870.26. The alterations and repairs came to $3,214.06. The ground rent was $1,700. The insurance was $45.00. Five per cent. commission to the Association for making repairs added $160.70, giving a total cost of $9,990.02.

Now let us see what the Association got out of it, after putting in toilet facilities, skylights and windows, repairing roofs and rain conductors, plastering the walls and painting the woodwork, providing fire-escapes and making all minor repairs. In the larger houses the weekly rents were 78 cents per room, and in the smaller 55 cents per room, or $1.65 for the house.

The rents in the first year, 1904, were $1,210.95. Taxes were $126.21; water rents, $41.50; repairs, $174.37; 7½ per cent. commission to the Association, $90.80. This gave a balance to the owner of $778.07, or a net return of 7.7 per cent. on the investment.

In the year following the rents were $1,203.55, and the balance to the owner was $822.81, or 8.2 per cent. net on the investment.

The Association does not expect to show a return greater than 4 per cent.; it does not promise even this. It finds it advisable in some cases to withhold a return for a time and turn back what profits there may be into the improvement of the property. This has been done by the express desire of the owners in certain instances. A temporary stringency of the market and the high cost of building materials or of labor are conditions that are instantly reflected in the balance sheet of an organization traveling on so close a margin. But prudent husbandry has made it possible to show that while the return in exceptional instances has fallen below four per cent. it has frequently risen to double or nearly double that figure. We have seen that on the League Street houses in the Second Ward the return soon after occupation was 7.5 per cent. per annum, and these were houses in an exceedingly dilapidated condition. The North Third Street property from which the hundreds of barrels of filth were taken showed a return of six per cent. in the first year.

The total income of the Association for 1916 was $26,496.23. From rentals there accrued $18,834.23; the agency commissions totalled $3,792.84; the dividend on Model Homes Company stock was $1,400.00; commissions on new construction and renovation planned and supervised for other owners amounted to $2,469.16. As the expenses of operation came to $17,799.26, the net earnings for the year were $8,696.97. The dividend of 4 per cent. payable February 1, 1917 left a small balance of $13.26 to add to the outstanding surplus of $15,973.01,—a surplus chiefly created by gifts and bequests to the Association.

It should be noted that the above showing is made in spite of certain adverse circumstances. Materials and labor had risen in price. The sum of $896.40 was charged against the year’s earnings for repair work undertaken in cooperation with the Emergency Aid Committee. A capital stock tax of one-half of one per cent., collected on the entire issued capital, covered a period of 14 months and amounted to very nearly $1,200. Under such conditions as these it would have been impossible to maintain the four per cent. dividend without the commissions earned on the planning and supervision of new construction and initial renovation of agency properties, as well as the customary agency fees. There is no doubt that the Association, which is very distinctly a philanthropic institution to which the business administration is incidental, should be relieved of the heavy burden of the capital stock tax. The dividends the Association periodically declares are paid to attract investors in dwellings for the poor. They are not earned for the sake of enabling those who own small houses to amass a fortune.

Such work as that of the Octavia Hill Association brings returns that are beyond the immediate cash appraisal, and creates a satisfaction deeper than any that has to do with the dollar-sign. In scores of American cities that are now planning good homes at low rates for earners of modest wages, made necessary by the rapid expansion of industrial interests, it is realized that it is fundamental to civic prosperity, as well as to individual felicity, to give the people who are not rich the fullest measure of comfort and happiness procurable for what they are able to pay. The public is learning day by day what it has a right to expect, and is finding out that the corruption of politics, while pretending to confer a benefit, often perpetrates the rankest fraud. The taxpayer, intelligently informed, is demanding the worth of his contribution to the city treasury. The children in school are acquiring that salutary discontent with things as they are and that spirit of intelligent interrogation that are the conditions precedent to human progress. For it is rightly said that asking questions is the beginning of reform.

Such an understanding as that which the Octavia Hill Association promotes between landlord and tenant pays dividends in the supreme pleasure it is to any wise and kind trustee of great wealth to know that his money is easing the burden of living for the humble toiler. The absentee landlord, content with an agent’s accounting, who does not care to take the trouble to see who occupies his houses and what kind of houses are occupied, can never realize the cordial satisfaction that one who takes an intimate personal interest in his property experiences.

The investment is in so much more than bricks and mortar, concrete and cast iron. It is an investment in human lives, and it underwrites the welfare of the city, the country, the world in the age to come by assuring the health and happiness of the unborn. If he who makes two blades of grass grow where one grew before is a benefactor, then what is he who tears down a ramshackle tenement and rears in its place such a house as the Casa Ravello, where many families enjoy the privileges of privacy and individuality, or a group of houses such as those in the Richmond district, where the children have abundant play room and each occupant controls half his house, or a small home for one family of which so many examples are entered on the books of the Association in various localities and at varying prices, all within a modest range?

The Octavia Hill investor can be very sure his dividend does not come from living conditions that it would perturb an active conscience to know about. There is nothing that need fear exploitation. A constant prophylactic scrutiny prevents those living conditions that are the shame of every city that in this twentieth century tolerates them.

If the Association were engaged in its blest business for the money only, it could not have enlisted through all these years the intense interest of so many who have realized in their own experience the correlation of the kind of house a person lives in and the kind of character that is therein developed. Too long have we taken it for granted that the poor love to live poorly: a survival of the mediæval tradition that only the nobles had noble emotions, and that the crowd merely existed as a foil to the luminous brave deeds of a chivalry monopolized by the upper classes. Today we feel that

and in that faith those who know what it means to have “the social conscience” plan and act.

Year after year the Annual Reports of the Octavia Hill Association have presented with brevity and precision the summation of the progress in the twelve months. Here are set down the statement of net earnings, the explanation of unusual expenditures, the current history of properties long in possession of the Association or newly acquired, the transfer of property for any reason, the peculiar problems that have presented themselves, the formation of subsidiary or contributory bodies, the particular objectives in view or the directions in which the Association is prepared to offer especially helpful service. The audited Treasurer’s Report appended enables one to see in its clear and simple presentment where every cent has gone, and what the return has been on the Agency Account for each property. But for all the explicit story, one still must read between the lines to comprehend completely what has been going on in each of the homes which—without an odious paternalism—has come under the trained and keen observation of the friendly rent-collector and the executive superintendent.

The question of whether the enterprise pays or not is put on the highest ground by those who best understand what the Association is not merely trying to do but effectually doing. Go to the little Hector McIntosh playground and watch the children laughing and caroling in the swings, digging in the sandpile and pretending a sea-beach, sliding uproariously down their little wooden toboggan, racing about at tag, gay as butterflies, and ask them if it pays. Go to the mothers in the shade of the trees of Workman Place, or culling fresh vegetables and flowers from their own little gardens, there in the thick of the maelstrom of the shabbiest part of the city, and ask them. Go to those of the negro race who have hitherto been forced to live on the Jim Crow leavings of everything, whether they wanted to be clean and decent or not, and ask them. But do not ask the landlords who are losing money because the poor are discovering what it is reasonable to demand of every landlord. Do not ask a miser or a skinflint or a misanthrope if it pays.

This study has been completely a failure if it has not disclosed the fact that sense and sentiment are yokefellows to mutual advantage in this undertaking. There must always be those for whom philanthropy and business cannot discover a common denominator. That is why the personal examples of Octavia Hill and of those who follow in her train are of value, for these examples prove to a thinking majority that such work as theirs is not the altruism of dreamy, vague enthusiasts, but that of persons with “their souls in the work of their hands,” who are translating into a balance on the right side of the ledger their aspiration for better things for “the poor and him that hath no helper.” In twenty-one years this program and its outworking have been submitted, not once, but again and again, to the pragmatic test, and have emerged triumphant.

The principles on which the enterprise was founded and is conducted promise its immortality and its expansion indefinite. It conflicts with no extant organization except the cohesion of the predatory forces of greed and deception. It does not mean the duplication of effort or the multiplication of superfluous offices; it does not economically call for amalgamation with other societies of parallel function. It meets a need that is real and constant, and it invokes the support and cooperation of good citizenship. It must be allowed to help the city more and more, and in its turn it must always receive the official aid which has been and is generously accorded.

In every large city a problem similar to that which has faced the Association must be met, if the community does not shirk the obligation to its own dependent stratum. In every large city the prestige of the whole community is impaired if dirty streets, a lack of good water, smoke-clogged air and disreputable hovels are constituents of the social order. It is a truism that wherever a large working population congregates these are evils that call for a vigil unceasing. The fundamental advantages that make life livable for rich and poor alike are not wafted on the breath of a pious aspiration. They come by somebody’s downright work for them. They come by the banded effort of good citizens. They come by an unremitting holy warfare on all Apollyon’s brood of evils that are the sequel to the reign of the spoilsman in politics. If it be a true religion that visits the fatherless and the widows in their affliction then this is a work that may well engage the attention of the professors of that religion, for it keeps a roof over the heads of many who cannot satisfy a mercenary landlord’s demand. Its appeal is various and profound; its outreach is beyond any hard-and-fast limitation; its record is an open book of progress step by step, season by season toward a goal clearly seen from the start. The Octavia Hill Association has kept faith with the sainted memory of her whose name it bears; it has kept faith with the great public of the city which it is destined to serve more largely as its resources increase and its assistants multiply; it has kept faith finally, with its own ideals, which are those of all who believe in that